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CCI conditionally approves Zee-Sony merger
The regulator has sought certain modifications to prevent the companies from abusing its dominating market position.
The Competition Commission of India (CCI) has conditionally approved the merger deal between Zee Entertainment Enterprises Limited (ZEEL) and Sony Pictures Networks India (SPNI) on Tuesday. It has sought certain modifications to prevent the companies from abusing its dominating market position.
In a statement issued by SPNI, it said, “We are delighted to receive CCI approvals to merge ZEEL into SPN. We will now await remaining regulatory approvals to finally launch the new merged company. The merged company will create extraordinary value for Indian consumers and eventually lead the consumer transition from traditional pay TV into the digital future.”
In a 21-page notice, the CCI stated that the proposed deal will leave the merged business in a ‘strong position’ with roughly 92 channels in India. Its market dominance and monopolistic pricing in terms of ad rates has the potential to hurt competition.
“To create a $10 billion TV enterprise will potentially hurt competition by having ‘unparalleled bargaining power’.” it stated.
The preliminary CCI competition assessment also showed that the merged entity would have a share of around 45% of the Hindi language segment, which draws the largest audience in the country, with Star a "distant second".
To assuage its concerns, Zee suggested the shutting down of a general entertainment channel (GEC).
The approval comes a month after it was reported that the commission has raised concerns about the adverse effects of the merger.
The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) had approved the proposed merger on July 29.
In September last year, Sony Group Corp. had announced merging its India unit with ZEEL to combine their TV networks, digital assets, libraries and streaming platforms. It was approved by Zee’s Board of Directors on December 21.
The Board had then said that while Sony will hold a 50.86 percent stake in the merged entity, promoters of Zee will hold 3.99 percent, and the other Zee shareholders will hold a 45.15 percent stake in the combined company.